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February 21, 2023
11 a.m.
Hawaii County Building
To: Committee on Finance
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Councilmember Matt Kaneali'i-Kleinfelder,Chair
Councilmember Cindy Evans,Vice Chair -'
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From: Grassroot Institute of Hawaii
Jonathan Helton, Policy Researcher
RE: Bill 23 — RELATING TO REAL PROPERTY TAX EXEMPTIONS
Comments Only
Dear Chair and Committee Members:
The Grassroot Institute of Hawaii would like to offer its comments on Bill 23which would
amend eligibility requirements for the additional homeowners exemption for individuals who
are 60 years of age or older.
In particular,this bill would require that any property owner 60 years of age or older must have
received the standard homeowner exemption for five of the last 10 years to be eligible for the
additional homeowner exemption, which allows qualified homeowners to deduct$85,000 or
more from the value of their home for property tax purposes.
Bill 23 would also clarify that this exemption runs with the property owner, not the land, so
homeowners who move would still be able to keep the exemption if they sold their house and
purchased a new one.
Whatever the intentions of this measure may be,we areconcerned that it might adversely
affect new homeowners who are more than 60 years of age.
Any local family who rents for most of their life, saves money for a home and purchases it
during retirement would not realize the benefits of the additional homeowner exemption. In
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such a situation, there would be no way for the new homeowners to receive this exemption
since they could not have received the standard exemption prior to,owning a home.
Further, this bill may also make it harder for residents aged 60 or older from other islands to buy
a home in Hawaii County by effectively excluding them from the additional homeowners
exemption.
We applaud the bill for clarifying that the additional homeowners exemption should run with
the owner. However, we would encourage the committee to consider the negative effects this
measure could have as currently written.
As we explain in a forthcoming report on property tax relief, Hawaii's counties have ample room
to reform their property taxes to provide assistance to struggling homeowners, renters and
businesses —while at the same time retaining the tax as a crucial revenue tool.
With property values — and therefore tax assessments —generally increasing, such relief is
much needed. Combined with inflation, our cost of living and high energy prices, soaring
housing costs are just one more reason for Hawaii residents to leave for good, which is why the
council should prioritize property tax reform in the coming months.
Thank you for the opportunity to testify.
Sincerely,
Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii